Swaziland has experienced a period of macroeconomic stability, but faces
formidable policy challenges and structural issues. A drought and a sharp decline in SACU
revenue have hit the economy, and an expansionary fiscal policy has worsened fiscal and
external imbalances. Public debt is rising, domestic arrears accumulating, and reserve
coverage is below adequate levels. Banks are well capitalized, but links between
government and financial institutions pose macro-financial risks. Structural impediments
have limited growth and contributed to keep poverty and inequality too high.